Hudson Council on Tuesday placed the city’s broadband service into its own enterprise fund and is now looking to sign up new structures that border the existing fiber optic lines.
Velocity Broadband, owned and operated by the city of Hudson, has provided high-speed internet service to city businesses since 2015.
Council voted 5-2 to approve Velocity’s new business plan and place accounting for the service into a separate enterprise fund. Until now, funding for the broadband service has come from the general fund.
Velocity currently serves 230 customers. The focus of the new business plan is to make the service available to more than 1,200 existing structures along the current fiber path, according to Will Ersing, chief broadband officer for Velocity.
Velocity previously had 659 potential customers in its market, with 230 of that number currently using the service, Ersing said. Velocity officials are hoping to sign up another 105 of those customers by the end of 2021, according to the business plan.
Now that council has approved the business plan, Ersing said his staff will make the service available to another 853 potential customers who are along the existing fiber path.
"That would take our current market up to just a little over 1,500 potential customers," said Ersing. "We’re not looking to expand that core trunk. We’re simply looking at maximizing that fiber network that we already have and connecting people along that fiber path."
Council members Beth Bigham (Ward 4) and Alex Kelemen (Ward 3) voted no.
"If it was only so simple as to place what we were originally talking about into an enterprise fund, but it’s not," said Bigham. "The whole dynamic has changed. In order to accept these options, I would need to believe the future projections contained in the recent business plan.
"Based on the information I have today, I am unwilling to support the expenditure of more taxpayer funds."
The city initially provided a $3.4 million loan to Velocity at the beginning of the endeavor. Council’s action on Tuesday places the debt service on the loan into the newly created enterprise fund and provides an additional $450,000 loan to Velocity.
Bigham said she began the dialogue about putting Velocity into an enterprise fund "to add a layer of accountability to the service line."
She says the plan chosen by council includes "the expectation that the general fund will continue to advance money to Velocity for any future shortfalls."
Council member Hal DeSaussure (At Large) said he felt council had "curtailed [staff’s] efforts to sign up customers that exist along the fiber line," signaling to staff that the broadband service has been "strictly for what we would consider old-model businesses."
There are many people who are running businesses from their home who would also like to connect to the internet service, he said.
"We have put barriers in front of [city staff] in terms of marketing for [home-based businesses]," said DeSaussure.
DeSaussure said the legislation tells staff "to go forward and sign up who you can sign up along our fiber line with the existing build-out that we have."
Council member Dennis Hanink (Ward 1) said he objected to the notion "that council has hindered staff in its responsibility to launch and run Velocity as a business."
"Council’s policy decision to have another tool to retain and attract businesses to the city has been clear," he said. "I’m not aware of any council action to deny Velocity the resources to execute on this policy decision."
Hanink said broadband has "turned out to be a higher risk effort than council was led to believe by the Magellan consultant study that staff vetted and upon which council’s decision was made."
Hanink said he would back the legislation "if it is truly needed for staff to understand their responsibility in running this as a business."
Council member Dr. J. Daniel Williams (At Large) said moving the accounting system to an enterprise fund reduces some of the financial flexibility.
"If [Velocity] makes money some day, it’s going to be very difficult to get it back into the general fund, if not impossible," said Williams. "I kind of hesitated to give up that flexibility, but looking at the overall project, I think it does make sense to go ahead … adopt the business plan, [and] put it in an enterprise fund."
Kelemen said Velocity has been labeled as a business at times, as a public service on other occasions and also as an economic development tool, he says.
"Whenever it’s convenient to say it’s a business, then we call it a business," said Kelemen. "Whenever it’s convenient to talk about it as economic development, we raise that flag."
He added he was "disappointed that we have gone through this based on what I think is an emotional decision on the part that we don’t want to admit some kind of failure or the possibility of failure."
Kelemen said council was making a decision based on "gut" rather than on "solid numbers."
"We have some very learned people, very successful people, but as a group, when we get together and make a decision, I’m very disappointed sometimes in how we do that and tonight’s one of those nights," said Kelemen.
Council member Lisa Radigan (Ward 2) said she backed the shift to the enterprise fund due to an "understanding of the need to really continue to make Hudson a place where businesses can thrive and grow, while also maintaining and increasing visibility and accountability."
Council President Bill Wooldredge (At Large) said he thought the business plan was "well-developed."
"I hope very much we put this to bed tonight," said Wooldredge. "We won’t be hashing over it every single minute or every single meeting, but certainly we’re going to keep an eye on it."
Reporter Phil Keren can be reached at 330-541-9421, email@example.com, or on Twitter at @keren_phil.